Hike in GST cess on luxe cars to hit job creation: JLR India MD

Rohit Suri, president and MD of JLR India, said that the proposal to hike GST rates will slow down sales of luxury cars, especially as prices may go up with the implementation of the latest measure.Pankaj Doval | TNN | August 14, 2017, 07:22 IST

Suri said lower duty in the GST regime had started to have a positive impact on the industry's growth.NEW DELHI:Jaguar Land Rover (JLR), the luxury car brand of Tata Motors, has termed the government's plans to increase GSTcess on large cars and SUVs a "flip-flop" and "disturbing" and said the move will hit job creation at the company and at its dealerships.

Rohit Suri, president and MD of JLR India, said that the proposal to hike GST rates will slow down sales of luxury cars, especially as prices may go up with the implementation of the latest measure.

"If volumes are not enough, we will have to re-look our expansion plans," Suri told TOI, just as the company drove in the new Land Rover Discovery priced upwards of Rs 68 lakh (ex-showroom Delhi).

"All the plans need to be re-worked."

The government had earlier this month decided that it would hike the tax component on luxury cars and SUVs, just a month after the duty on them had come down in the GST regime beginning July.

The move - that will hike cess on vehicles from existing 15% to the proposed 25% (over and above the 28% GST tax rate) - has been cleared by the GST Council and now awaits legislative approval.

Suri said one of the key impacts from the slowdown in demand will be on creation of jobs with as many as 500 new vacancies going into deep freeze.

"If the (industry) volumes are not up to the mark, the business case gets affected. Behind a customer and a car, there are people employed in factories and showrooms."

On an average, the company employs around 50 people at a single dealership. "These include people involved in logistics, peons, accountants, sales and workshop personnel. There are around 400-500 people who could have been hired here... Now we will stop our expansion plans."

Suri said lower duty in the GST regime had started to have a positive impact on the industry's growth. "We had dropped prices, and affordability had gone up. The dealers were positive and there was a pickup in retail sales."

The government's move has been met with severe criticism from other players too with companies such as Mercedes Benz, Audi, and Toyota also coming hard on the proposal.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.